Remuneration to a director

None of the provisions referred to above are applicable to a Private Limited Company. In other words those provisions you have quoted are applicable only to a Public Limited Company. A private limited company if authorised by its Articles of Association can pay remuneration to its directors (there is no ceiling), whole time directors and managing directors. Approval of the Board is required to be obtained.

In respect of appointment of a Director as Whole Time Director and payment of remuneration, the private limited company is required to file Form 32 (for change of designation) with ROC within 30 days from the date of approval of the Board.

In respect of appointment of a Director as Managing Director and payment of remuneration, the private limited company is required to file Form 32 and Form 23 (Section 192) with ROC within 30 days from the date of approval of the Board.

There is no requirement to obtain approval of the Members or Central Government.

with regards

Muralidharan

The law does not restrict the payment of remuneration by a Private Limited Company to its Managerial Personnel/directors, since provisions of Section 269, 198, 309, 310 etc read with Schedule XIII are inapplicable in case of a private Limited Company.

The decision to remunerate is subject to the approval of the board as well as shareholders as per its Article of association.

Hope I am able to bring some clarity.

Revert for further query.

Best Regards

Ankur Garg

Dear Shruti,

The provisions of Managerial Remuneration like Sections 198, 269, 309 and schedule XIII of the Companies Act, 1956 is not applicable to private company, unless it is subsidiaries of public company.

Regards

Ajay 

I agree with Ankur and Ajay.

Regards,

R. Raman

HI Shruti,

I too agree with the above reply.

Ramu

Sir,

In your reply you have stated that it is either board or AOA approval ? can you please clarify this

in addition to my earlier question i want to know whether the above answers applicable to "increase the Directors Remuneration" also & whether only board resolution will be a valid one & if yes, can such increase in remuneration be from back date or period and can i have format of the resolution to be passed to this effect.

It means go ahead with the approval of board of directors or follow the procedure mentioned in the Articals of the company.